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Credit experts warn of holiday pitfalls as 5.2 million jetsetters snap up January bargains

By TotallyMoneyJan 14th 2020

Credit experts TotallyMoney have advised that those booking holidays could protect themselves under Section 75 of the Consumer Credit Act by using a credit card, meaning customers could get their money back should something go wrong. The advice comes at a pivotal time for holiday makers, following the devastating collapse of Thomas Cook and WOW Air last year that left hundreds of thousands massively out of pocket.

Section 75 of the Consumer Credit Act protects all credit card transactions between £100 and £30,000

An estimated 5.2 million* Brits will book holidays this January, yet almost a third (29%)† of consumers don’t realise Section 75 covers them at all

More than half (55%) aren’t aware they’re protected by Section 75 for the cost of a hotel when booking directly

A third (34%) falsely believe that Section 75 covers PayPal transactions over £100

With many people left in the dark last year about if and how they’ll get a refund, customers can live safe in the knowledge that they’ll be able to get a refund under Section 75, providing the Debtor-Creditor-Supplier (DCS) Link isn’t broken.

This means the exchange of money between the customer, the credit card company, and the service provider must be maintained. Section 75 therefore wouldn’t apply when the DCS link is broken, which happens when using third parties, such as a travel agent.

Alarmingly, booking a holiday through a travel agent doesn't cover customers if the operator folds. Customers should therefore confirm their holiday is ATOL-protected if booking through an agent.

Choose credit, not debit

Those booking their holidays directly, however, should be aware of Section 75 and its benefits before they do, to avoid being left short in worst-case scenarios.

TotallyMoney CEO Alastair Douglas, comments: “In a world where things can often go wrong, Section 75 is a safety net. The trouble is, many don’t realise it exists.

“With great deals in January and many suffering from post-Christmas blues, it’s easy to see why people are keen to book a holiday. However, having something go wrong while away — during what’s often the highlight of your year — is an awful situation to be in.

“If it so happens you can’t jet off, or worse yet, you’re stuck and can’t get home, you can be left feeling like there's nothing you can do. Section 75 adds an extra level of security that can really help.

“It was disheartening last year to see so many families stranded and out of pocket when Thomas Cook collapsed. If something like this happens again, being covered by Section 75 means you can contact your credit card provider to claim a refund.

“At TotallyMoney, we’re on a mission to improve the UK’s credit score and help people move on up to a better future. Not only could responsibly using a credit card improve your credit score, but being covered by Section 75 could also improve a situation that might otherwise be financially very stressful.”

Section 75 Top Ten Tips

To make sure you’re never caught out, here are 10 things to know about how Section 75can help you when booking your next getaway.

1. Limits on claimsIndividual items and purchases costing more than £100 and up to £30,000 are covered under Section 75. So whether it’s a cancelled flight or an all-inclusive family holiday and the company goes bust, as long as you paid on credit card, you could be reimbursed the full amount.

2. We're talking credit, not debitSection 75 doesn’t cover anything bought using a debit card. Chargeback protection is as good as you’ll get with debit.

4. Pay a deposit, get full value coverWhen a deposit is needed for a holiday, use a credit card — even when the deposit is less than £100. Should anything prevent you from settling the balance (like the airline collapses), Section 75 lets you claim the full amount. Not just the paid deposit.

5. Pay part credit and part cheque, get full value coverThe same goes if you decide to pay part of the balance by credit card and the rest by cheque. Consumers can reclaim the full value of the qualifying goods and services even if the total balance wasn’t paid using a credit card.

6. Stay protected on closed cardsSay you buy a holiday, close the credit card you bought it with, but something goes wrong that’s not your fault, Section 75 means you can still make a claim.

7. Extra expense coverIf you book a holiday and the flight is cancelled, through Section 75 you could claim back additional accommodation and food expenses, providing those consequential losses were reasonable.

8. The Section 75 loopholesBuying through a third party (like travel agents), additional cardholder purchases, or cash that’s withdrawn from your credit card won’t offer Section 75 protection. You need to have paid the company directly (so purchases made through PayPal, for example, aren't covered).

9. Section 75 applies to all credit cardsWhen it comes to Section 75 there isn’t one rule for one credit card company and something different for another. All credit cards come with Section 75 benefits.

10. The claims processFirst port of call: the service provider, for example the airline or hotel (depending on the situation). Failing that, go to the credit card company — this might be your bank or building society, not Visa, Mastercard or AMEX. They’ll get you to fill out a claim form and voila! Your money is back where it belongs.

About TotallyMoney

Free credit report providers and credit experts, TotallyMoney, are on a mission to improve the UK’s credit score and help people move on up to a better future.

TotallyMoney launched its free credit report in late 2017, and today has 3 million customers.

TotallyMoney is the highest rated free credit report provider on Trustpilot. They are also 2018, 2019 and 2020 winners of Best Free Credit Report Provider at Moneynet’s Personal Finance Awards, showing recognition from both its customers, as well as within the wider industry.

TotallyMoney is backed by Elliott Advisors (UK) and Scottish Equity Partners (SEP), following a £29 million investment announced in January 2019.

TotallyMoney is also a Sunday Times Best Company as well as a UK’s Best Workplace 2019.

We're on a mission to improve the UK's credit score and help people move on up to a better future.

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